7 IPPs offer tariff cut, Rs11bn waiver if Nepra stops action

ISLAMABAD: Seven independent power producers (IPPs) have offered to slashing electricity tariffs by up to 50 paisa per unit and waive over Rs11 billion in late payment surcharges — provided the government closes ongoing investigations into alleged abnormal profits and withdraws legal cases against them.

In a joint tariff revision plea before National Electric Power Regulatory Authority (Nepra), representatives of the IPPs argued that fuel, operation and maintenance (O&M) cost recoveries had already been settled and urged the regulator to end suo motu proceedings and probes.

An IPP’s representative stated that their petition for tariff revision was conditional upon the withdrawal of all legal cases against them. “Our request is tied to the closure of all cases filed against us,” the representative said, adding that they had challenged all NEPRA notices in the Islamabad High Court. Similarly, another IPP’s representative demanded withdrawal of suo motu proceedings against their company.

The Central Power Purchasing Agency (CPPA), backing the petitions, informed Nepra that future savings under fuel and O&M heads would be shared with the government to pass on relief to consumers. While briefing the authority, the CPPA’s Managing Director said, as part of the ongoing negotiations, the seven IPPs had agreed to waive over Rs11 billion in late payment surcharges. The CPPA further stated that both parties – CPPA and the IPPs – would withdraw their pending cases from courts following NEPRA’s approval.

Nepra’s hearing also touched on exchange rate adjustments, the ‘take-and-pay’ mechanism, and insurance caps—areas where CPPA said understandings had been reached. According to CPPA officials, negotiations with these seven IPPs are expected to result in a reduction of up to 50 paisa per unit in electricity tariffs. They also highlighted that broader talks with multiple IPPs have so far secured financial benefits worth Rs950 billion over the lifetime of the power plants.

“So far, agreements have been reached with 29 IPPs,” CPPA officials said, emphasizing that no coercion was involved in the agreements. “Whichever IPP did not wish to enter into an agreement was free not to. For instance, Halmore Power did not sign.” NEPRA will review the petitions before issuing its decision.